‘Make in India is not about emulating the Chinese model’

It’s about following an unconventional, non-linear approach

Make in India is a concept that has generated great expectations. China’s rising labour costs, and its transition from an export-led to a consumption- led economy, are leading to the abdication of its role as the world’s factory. India, waiting in the wings, is eager to rush in and fill the vacuum. We have the labour pool, the skills and a government with the necessary political will. India as the next manufacturing powerhouse is a vision the Mahindra Group has invested in. Our SEZs in Chennai and Jaipur are among our most exciting businesses today.

However, as contrarian voices point out, the world has changed since the time China sported the mantle of being manufacturer to the globe. There are many reasons why it may not be all that easy for India to step into China’s very large shoes.

Firstly, the global economic and political landscape has changed. When China was rising, the world was booming. Companies were rushing for viable sources of supply. Outsourcing was not a political hot potato. Today, most nations are still struggling with the aftermath of the 2008 debacle. Growth has slowed down. Politicians are turning protectionist. Terrorist attacks like the recent one in Paris further encourage the rise of right-wing parties with insular views. It will not be a cakewalk for India to penetrate global markets.

Secondly, technology has changed. As the Fourth Industrial Revolution gains momentum and IoT comes to the fore, advanced nations will overcome the high-wage labour disadvantage they have today. Alongside, technological innovations like 3D printing will enable even garage manufacturing to be viable. Large-scale, low-cost manufacturing capacities may not continue to be an advantage.

Thirdly, the consumer has changed. Today’s consumers are savvy and individualistic. They demand a high degree of customisation and are willing to pay a premium for it. This calls for flexible technology, locational proximity to large markets and to consumers. All this does not augur well for the conventional Chinese-style outsourced manufacturing of the 1990s.

But I would like to propose that this is not a limitation; it is an opportunity to play to India’s strengths. And fortunately, India’s strengths synchronise with the possibilities that are opening up. We have the entrepreneurial drive and the high engineering skills to create a ‘jugalbandi’ or interplay between IT and manufacturing—and bundle intelligent content along with manufactured goods. As IoT takes over, this will become a vital combination. Embedded intelligence must become our forte.

In parallel, technology is enabling democratisation and decentralisation. Technologies like 3D printing enable distributed manufacturing. The pervasiveness of the Internet enables customers to place orders from and to any corner of the globe. The government must find ways of also including this opportunity in its Make in India thinking, and bringing these technologies and skills to villages across India, enabling them to service customers from any corner of the globe.

So Make in India is not about emulating the Chinese model; rather it’s about following an unconventional, non-linear approach. It’s about combining IT and engineering skills with the opportunities that leapfrogging technology offers. If we can do that successfully, India is poised to inherit the new-age manufacturing of the future.